Apple upgrades low-cost iPad option, offers cheaper iPhone 5C

Mar 21, 2014

As Google's Android operating system chips away at Apple's market share in tabloids and smartphones, the world's most valuable company announced Tuesday that a newer iPad model will be offered at a reduced price and a cheaper iPhone is on sale in certain markets outside the United States.

In a news release Tuesday, Apple Inc. said that it would begin offering its fourth-generation iPad, introduced in late 2012, at $399 and up, the price at which it had been selling the iPad 2. The newer iPad model has Apple's Retina high-definition display and faster A6X chip, and it uses the same Lightning charge cord as newer iPhone and iPad models.

Apple marketing executive Philip Schiller said in Tuesday's release that Apple's new cheaper option offers "a dramatic upgrade in power, performance and value compared to the iPad 2 it replaces."

In addition, Apple told media outlets Tuesday that it had begun selling a version of the iPhone 5C with less memory in Europe and other parts of the world for a lower price. The iPhone 5C was expected to be Apple's first true foray into the market for cheaper electronics, and many observers were surprised when the company announced that the smartphone - which does not offer as many features as the iPhone 5S - would still sell for no less than $549 in the U.S. without subsidies from wireless carriers.

"We never had an objective to sell a low-cost phone," Apple CEO Tim Cook said in a Bloomberg Businessweek interview last year, after there was some grumbling about iPhone 5C pricing. "Our primary objective is to sell a great phone and provide a great experience, and we figured out a way to do it at a lower cost."

In other countries, the devices were even more expensive, and some areas of the world do not allow carriers to offer subsidies to customers, leaving the full brunt of the price tag on consumers. Apple said Tuesday that it would begin selling an 8GB model, which has half the memory of the smallest previously available model of the phone, in China, France, Germany, Britain and Australia for a lesser price.

The cheaper iPhone 5C will still be more expensive than comparable phones using the Android operating system, however: In China, the phone will sell for roughly $665, while the 16GB iPhone 5C sells for $730; in Great Britain, the phone was selling for $711, $67 cheaper than the 16GB version.

Apple has had difficulty selling the iPhone 5C, with most smartphone buyers seeming to opt for the more expensive iPhone 5S or less expensive Android gadgets. Apple's market share in smartphones declined from 18.7 percent in 2012 to 15.2 percent in 2013, while phones using Google's Android operating system grew from 69 percent to 78.6 percent, according to research firm IDC.

"Although it remains wildly popular in the smartphone market, Apple has been criticized for not offering a new low-cost iPhone nor a large-screen iPhone in 2013 to compete with other (phone makers)," IDC noted in its February report.

Apple's lead in the tablet market disappeared in 2013 as well, according to IDC. Apple captured 52 percent of the tablet market in 2012, but that share plunged to 36 percent in 2013, while Android tablets commanded 60 percent of the market.

Google is unveiling its cheapest Chromebook laptops yet, two versions priced at $149 aimed at undercutting Microsoft's Windows franchise and gaining an even stronger hold in school and overseas markets.